Shares hit record highs, oil and dollars rose as Biden took office

NEW YORK (Reuters) – Global equity benchmarks rose to new all-time highs and oil prices rose Wednesday as investors shifted to riskier assets in anticipation of further U.S. stimulus under the new Biden administration to repair the economic damage of the coronavirus pandemic.

United States President Joe Biden, who was sworn in on Wednesday, last week presented a proposed $ 1.9 trillion stimulus package to boost the economy and accelerate vaccine distribution.

US Treasury Secretary Candidate Janet Yellen urged lawmakers to “go big” to save the economy and worry about debt later in a confirmation hearing Tuesday.

Pandemic relief would take priority over tax hikes, he said, while calling on corporations and the rich, both winners from Republican tax cuts in 2017 – to “pay their fair share”.

Investors in European equities welcomed the comments, with the Euro STOXX 600 up 0.7%. Luxury stocks gave the biggest boost, with Richemont’s quarterly sales up 5%, driven by strong growth from its jewelry brands in Asia and the Middle East.

The spirited mood mirrored that in Asia, where the MSCI Asia Pacific Index outside of Japan rose 1% to its all-time high. Hong Kong’s Hang Seng gained 1.1% nearing its 2019 peak. Australian equities hit a record high.

“They realized that there are limits to what monetary policy can do to effect change in the real economy,” said Shaniel Ramjee, Pictet Asset Management’s senior investment manager. “The Fed will continue to buy bonds issued by the US Treasury to finance fiscal programs.”

MSCI’s worldwide stock index gained 1.13%, reaching a new record high. The index has grown 3.5% since the beginning of January.

On Wall Street, the Dow Jones Industrial Average rose 257.86 points, or 0.83%, to 31,188.38, the S&P 500 gained 52.94 points, or 1.39%, to 3,851.85 and the Nasdaq Composite added 260.07 points, or 1.97%, to 13,457.25.

The jump in risk assets came when the United States officially passed the 400,000 death mark from the coronavirus since the beginning of the pandemic. The death toll in the United States last week surpassed 23,000, setting a new record for the third consecutive week.

China, meanwhile, said it is facing its worst virus outbreak since March 2020.

The dollar index was up 0.04%, with the euro down 0.17% to $ 1.2107.

Positioning data showed that investors are overwhelmingly short of dollars, betting budgets and current account deficits will weigh on the greenback.

The 10-year benchmark notes increased by 4/32 in price to make 1.0802%, from 1,092% late Tuesday.

Spot gold added 1.2% to $ 1,861.86 per ounce.

On Wednesday, Italy’s benchmark debt costs plummeted in over a week after Prime Minister Giuseppe Conte narrowly managed to hold office, even though he now heads a minority government.

Yields on 10-year Italian government bonds fell to their lowest since January 11 – before Conte lost the majority – to 0.533%, down 2 basis points from the day.

Oil prices have risen in the hope that Biden’s proposed stimulus will boost economic output.

Brent crude was $ 56.08 a barrel, up 0.3%, while US crude oil rose 0.5% to finish at $ 53.24.

Reporting by David Randall; Editing by Andrea Ricci and Marguerita Choy